Mother's book teaches value of saving

Humberto CruzTribune Media Services columnist

I asked my daughter, Veronica, to write this column because it's about something she did that can inspire other parents. Hers is an important lesson about choices, one that adults as much as children need to learn.

Let Veronica tell the story:

We were in a toy store when my 6-year-old son, Aidan, started getting very excited. "They have it, they have it!" he shouted, holding a Thomas the Tank Engine Mountain Set toy.

" `We're not getting that today, Aidan,' I said. `It costs $100.' "

Upset, Aidan kept asking why. I realized he had no frame of reference for what $100, or even $1, meant.

I wanted Aidan to know that money itself is more valuable than anything he could buy because it represents choices. I also wanted him to understand that by choosing to buy a certain toy or book, for example, he was also deciding not to use that money for something else (as adults do when they splurge for a big plasma TV rather than put the money into an IRA).

Economists call this "opportunity cost." Adults face this kind of choice all the time, not just when deciding whether to save for retirement. My husband, Kyle, and I, for example, often discuss whether to go out to dinner as a family on Friday night, knowing it will mean having to cut back on lunches out during the week.

To teach Aidan about choices, I made him a book with printer paper titled "My Money Book."

"I earn money when I do chores. I can save my money to buy things," the book began. Using a page for each value, I pictured "Things $1 can buy," "Things $5 can buy" and so on, up to $100, the cost of the Mountain Set.

I listed not only items Aidan really likes but also things he uses but doesn't realize cost money: $20 for a computer game or a pair of sneakers, $30 for six books or a raincoat.

On the page for the $100, I also included camping equipment, five computer games or 400 bouncy balls and showed Aidan how many weeks of allowance he would need to save to have $100.

His eyes widened when he realized he could get five computer games for the same price as a Mountain Set. "I could get five games?" he asked. I told him he could spend his money whichever way he wanted, as long as he had enough saved.

Teaching young children the discipline of saving can be challenging. "When children see something they want, they want it now. They can be very impulsive," said Phyllis Bye, a member of the Colorado Council on Economics Education, who taught elementary school-age children for more than 30 years.

"We often tell them, `You have a quarter, you can buy this or you can buy that.' Often we don't remind them of the choice to save," Bye said. "It's valuable to teach that while it may be satisfying to buy something right now, the opportunity to spend that money won't come back."

Indeed, Aidan had been surprised that once money is spent, it is gone.

Bye suggests parents give children the opportunity to save toward a special purchase. "For every child it will be different," she said. Parents can also encourage saving by placing coin jars around the house and going to the bank together to see how much has accumulated.